Lument Finance Trust (LFT) 13 Nov 242024 Q3 Earnings call transcript

Good morning, and thank you for joining the Lument Finance Trust Third Quarter 2024 Earnings Call. Today's call is being recorded and that will be made available via webcast on the company's website. I would now like to turn the call over to Andrew Tsang at Lument Investment Management. Please go ahead.

Good morning, everyone. Thank you for joining our call to discuss Lument Finance Trust's third quarter 2024 financial results. With me on the call today are Jim Flynn, our CEO; Jim Briggs, our CFO; Jim Henson, our President; and Zach Halpern, our Managing Director of Portfolio Management. On Tuesday, November 12, we filed our 10-Q with the SEC and issued a press release to provide details on our third quarter results.

We also provided a supplemental earnings presentation, which can be found on our website.

Before handing the call over to Jim Flynn, I'd like to remind everyone that certain statements made during the course of this call are not based on historical information and may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports filed with the SEC, in particular, the Risk Factors section of our Form 10-K. It is not possible to predict or identify all such risks. And listeners are cautioned not to place undue reliance on those forward-looking statements. The company undertakes no obligation to update any of the forward-looking statements. Further, certain non-GAAP financial measures will be discussed on this conference call. A presentation of this information is not intended to be considered in isolation nor as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC.

For the third quarter of 2024, we reported GAAP net income of $0.10 and distributable earnings of $0.10 per share of common stock, respectively. In September, we also declared a dividend of $0.08 per common share with respect to the third quarter, in line with the prior. I will now turn the call over to Jim Flynn. Please go ahead.

Thank you, Andrew. Good morning, everyone. Welcome to the Lument Finance Trust earnings call for the third quarter of 2024. We appreciate all of you joining us today. We'll start -- on the U.S. economic outlook, we remain cautiously optimistic and notwithstanding the new administration and uncertainties that come with that, recent cuts in the short-term rate, continued signs of cooling inflation, relatively low unemployment figures, all point toward the likelihood of a soft landing. The long-term multifamily market fundamentals remain strong. And we were starting to see stability in asset cap rates, which translated into modest increase in property acquisition activity as investors came off the sidelines.

As we transition to the new government, we will continue to monitor each of these metrics, but continue to have confidence in the future of the multifamily market.

We expect to continue to deliver a stable, sustainable dividend to our investors by continuing to focus on multifamily credit.

We continue to see a steady ramp-up of the manager's origination pipeline and a trend that we expect to continue into the coming year. The ability of our manager and its affiliates to actively pursue and close on attractive lending opportunities, whether or not LFT currently has investment capacity is a significant competitive advantage for the company.

During the quarter, LFT experienced only $51 million of payoffs. And we were able to quickly and effectively redeploy this capital into 2 multifamily loan assets acquired from an affiliated manager. We rely on the deep experience and expertise of our manager's dedicated asset management team to continue to achieve positive outcomes for the company and to maximize shareholder value.

During Q3, our portfolio continued to perform well on a relative basis. The weighted average risk rating of our book held steady versus prior quarter at 3.6. And we had no new loans added to the 5 risk rating category during the period.

We also determined no additions needed to our specific loss reserves. Levels were appropriate as of quarter end. We're also pleased to share that late last week, we achieved a positive resolution on 1 of our 4, 5-rated assets that existed as of the end of the quarter on 9/30. We received full payment of all outstanding loan principal plus accrued interest from the borrower.

As mentioned on our last call, we are actively evaluating alternatives to recap our 2021 CLO securitization transaction, which had a reinvestment period that ended in December 2023.

As of quarter end, the CLO had a weighted average cost of funds of SOFR plus 164 basis points with an effective advance rate of approximately 79%.

We have observed relatively favorable new pricing on new CRE CLO issuances over the last couple of months, which is an encouraging sign that investor demand may be returning to more normal levels. Securitization via CLO remains one of the potential paths to financing the portfolio. But we will carefully consider the alternatives to ensure our ultimate choice best aligns with our overall financing strategy and creates long-term value for our shareholders. With that, I'd like to turn the call over to Jim Briggs, who will provide us details on our financial results. Briggs?

Thanks, Jim. Good morning, everyone. Yesterday evening, we filed a quarterly report on Form 10-Q and provided a supplemental investor presentation on our website, which we'll be referencing during our remarks. Supplemental investor presentation has been uploaded to the webcast as well for your reference. On pages 4 through 7 of the presentation, you will find key updates and earnings summary for the quarter.

The third quarter of 2024, we reported net income to common stockholders of approximately $5.1 million or $0.10 per share.

We also reported distributable earnings of approximately $5.5 million or $0.10 per share. A few items I'd like to highlight regarding the activity during the period.

Our Q3 net interest income was $9.5 million, largely flat through Q2 2024.

While net interest income was generally in line with the prior quarter, the weighted average coupon and declining outstanding portfolio UPB drove slightly lower interest income recognition versus the prior quarter, which was substantially offset by approximately $500,000 of additional accelerated purchase discounts in connection with loan payoffs. Total operating expenses were $2.9 million in Q3 versus $3.5 million in Q2. The majority of the decrease in expenses was driven primarily by a lower sequential accrual of incentive fees due to our manager, which are payable on a quarterly basis equal to 20% of the excess of core earnings as defined in the management agreement over an 8% per annum return threshold. Other general operating expenses were largely in line quarter-over-quarter. The approximately $350,000 difference between reported net income and distributable earnings to common was attributable primarily to an increase in our allowance for credit losses.

As of September 30, we had 4 loans risk rated of 5. One was a $17 million loan collateralized by a multifamily property in Brooklyn, New York, risk rated of 5 due to maturity default and our nonaccrual status with income recognized on a cash basis.

During the period, the company recognized approximately $400,000 of interest on this loan.

Another was a $20 million loan collateralized by 2 multifamily properties in Augusta, Georgia, risk rated 5 due to monetary default and our nonaccrual status with income recognized on a cash basis.

During the period, the company recognized approximately $700,000 of interest on this loan.

As Jim mentioned, we had a positive resolution to this loan subsequent to quarter end, which Jim Henson will touch on in his remarks.

Third was a $15 million loan collateralized by 2 multifamily properties in Philadelphia, Pennsylvania, risk rated 5 due to monetary default. And our nonaccrual status with cash received from the borrower recognized on a cost recovery basis.

During the period, the company recognized approximately $300,000 of cash received from the borrower as a reduction in our carrying basis of this loan. The fourth, 5 risk-rated asset was a $32 million loan collateralized by a multifamily property in Dallas, Texas. That was and is in technical default. We evaluated these 4 or 5 rated loans individually to determine whether asset-specific reserves for credit losses were necessary. And after analysis of the underlying collateral, we maintained but did not add to the approximately $900,000 in specific reserve, which we recorded during the second quarter of this year. The general CECL reserve increased by approximately $300,000 during the period driven primarily by changes in the macroeconomic forecast. Company's total equity at the end of the quarter was approximately $243 million. Total book value of common stock was approximately $183 million or $3.50 per share, increasing slightly from $3.48 per share as of June 30. We ended the third quarter with an unrestricted cash balance of $46 million and our investment capacity through 2 secured financings was fully deployed. I'll now turn the call over to Jim Henson to provide details on the company's investment activity and portfolio performance during the quarter. Jim?

Thank you, Jim.

During the third quarter, LFT experienced $51 million in loan payoffs. And we acquired 2 new loans with an initial principal balance of $45 million and a weighted average coupon of SOFR plus 323 basis points.

As of September 30, our portfolio consisted of 75 floating rate loans with an aggregate unpaid principal balance of approximately $1.2 billion. 100% of the portfolio was indexed to 1-month SOFR and 93% of the portfolio was collateralized by multifamily properties. At the end of the third quarter, our portfolio had a weighted floating note rate of SOFR plus 353 basis points and an unamortized aggregate purchase discount of $4.3 million.

While we endeavor to actively manage the maturity risk in our portfolio. It is worth noting that we had the foresight at the time of loan origination to include appropriate extension features in our transaction.

As a result, the weighted average remaining term of our book continues to be approximately 28 months if all available extensions are exercised by our loan borrowers.

As mentioned earlier, our secured financing remains attractive. At the end of the third quarter, the FL1 CRE CLO transaction completed in 2021 provided effective leverage of 79% at a weighted average cost of funds of SOFR plus 164 basis points. The LMF financing completed in 2023 provided the portfolio with effective leverage of 82% at a weighted average cost of funds of SOFR plus 314 basis points. On a combined basis at quarter end, the 2 securitizations provided our portfolio with effective leverage of 80% and a weighted average cost of funds of SOFR plus 214 basis points.

As of September 30, approximately 60% of our loans in the portfolio were risk rated A3 or better compared to 63% at the end of the prior quarter.

Our weighted average risk rating was unchanged sequentially at 3.6.

As of the end of September, we had 4 loans rated risk rated 5 with an aggregate loan exposure at the end of the quarter of approximately $84 million or approximately 7% of the carrying value of our total portfolio.

As, alluded to previously, subsequent to year-end, we had a positive resolution of the $20.3 million 5-rated loan collateralized by 2 multifamily properties near Augusta, Georgia. Last Friday, the loan, which had been in monetary default, was paid off. In connection with repayment, the company recorded interest income of approximately $0.5 million in the quarter ending, I'm sorry, we'll record interest income of approximately $0.5 million in the quarter ending December 31, 2024, representing interest and other fees collected from the borrower payoff. Since this loan was held by the company on an unlevered basis outside of our financing structures. This repayment will increase cash and cash equivalents by approximately $20.8 million.

Our managers' investment team continues its proactive management of the company's investment portfolio, working closely with borrowers to manage all of our positions and monitor financial performance of our collateral assets and our borrowers' progress in executing their business plans. With that, I will pass it back to Jim Flynn for closing remarks and questions.

Thank you, Jim. Appreciate everyone's interest and I'd like to open the call up to any questions you might have.

[Operator Instructions] Your first question comes from the line of Jason Weaver from JonesTrading.

First of all, I wondered if you could comment on your visibility into the pipeline after quarter end today. And as a follow-up, we just noticed some whispers among possible prospective borrowers hearing some comments that sponsors might be possibly thinking about delaying projects. And this is only in the last week alone, so it may be too soon to tell.

Yes. I'll give a general -- my thoughts there and maybe Zach can give some specifics. But certainly, the election has provided some uncertainty, right? The market has reacted and some conflicting patterns, right, in terms of where the overall stock market has gone, where the tenure has gone. We saw the rate cut, which was expected. But I think expectations have moderated in some ways until -- from my perspective, until we see what does the new administration look like, who are the key players in the key seats, also similarly how the final balance in the House, the committee chairs, et cetera. And all of those things, I think, have led to this, hey, what's going to happen with this new government? Are we going to spend more? Are we going to -- is there going to be an expectation that we're going to have a more inflationary market than we thought, right? I think that's what's happening in the market. But I also think it's probably, again, I think it's a little overstated until we see what's happening. We've heard a lot of talk going the other way. Then expectations are that people are starting -- or government officials are starting to recognize the debt problem and that perhaps there'll be some moderation as we move forward.

You saw the announcement, whether it's bells and whistles on the new Department of Efficiency, which admittedly is a bit of an ironic creation of a department in government that's entirely dedicated to evaluating efficiency of other departments. But so the short answer is, I think, as you said in the past week or 2, certainly, owners and borrowers have said, look, I want to see what happens here. I'm not going to transact into this volatile market that's going on over the couple of weeks after the election. But I also have seen and heard that these sponsors may be waiting out some of the uncertainty. There's, still expectations that there's business that they need to get done over the next year, whether that's refinancing, whether that's exiting an asset, both of those on the exit, particularly look for potential investment opportunities.

So I don't see the slowdown looking like it did in the early part of 2023, where you had this major slowdown and concern around the market. I do see, I have seen and heard anecdotally, as you said, that guys are taking a pause to consider, hey, do I need to transact in December? Or can I wait until the first quarter? That's real.

Now in this market, there is still an expectation that the short-term rate is going to continue to come down, perhaps maybe not as low as some people had hoped for. But there's, still expectations for it to come down and that does help to bridge market. But certainly, the long-term rates are a driver there. I can't tell you. Zach, maybe you can just give a quick note. I mean, from a broader standpoint on our pipeline broadly as a manager. And this is true of our fixed rate products that we provide that on and bridge that our pipelines haven't looked like this. At least in most of the products, I won't say every single one since 2021.

And so, are we in a transition period? Yes. Is it dire? I don't think so because I do think the economic outlook broadly for the country is still pretty good.

And so that will translate into higher rents. Higher rents mean that you can cover some of the higher costs.

And so as we move forward, again, I think we're in a low period of let's see where we shake out, what's a stable interest rate environment look like and then people can move forward. No one likes to transact into uncertainty. But Zach, on the pipeline, if you want to give a couple?

No, that's definitely helpful.

I would echo everything that Jim said.

I think that really what we need to delineate is pre-rate cuts versus post the first rate cuts in August. And activity has picked up tremendously. We've got a couple of hundred million expected to close in December and additional activity along those same lines into Q1, so positive on that front.

And then one sort of clarification, during your prepared remarks, I get the blended sort of CLO financing cost of funds is S plus 214. But I heard another comment regarding the current market plus 174. Was that just more characterizing what you see as sort of where a similarly rated transaction might clear today?

I'm looking at it.

So the comment I made in the first part was, today, the CLO 1, the cost of funds of that CLO, the existing CLO is SOFR plus 164 at a 79% advance rate. That's the CLO that is deleveraging that has no more reinvestment rates.

So relative to the market, I think that cost is still attractive, but obviously, it's not permanent.

As we delever, that will continue to go up. But we do think that there's opportunity in the market to probably get a slightly higher leverage. But the cost of funds would be above that at this point.

Your next question comes from the line of Stephen Laws of Raymond James.

Congrats on the 5-rated resolution in November. I know that was good to see. I wanted to follow up on the CLO question. Kind of how do you think about regarding FL1? How do you think about the slightly higher cost of funds versus it seems like advanced rates are in the mid-80s and looking at 2, even 3-year replenishment periods in some of the deals that have been done recently.

So how do you think about that as far as timing of collapsing that deal and looking at putting a new one in place? Is that a first half '25 event? And I guess it may come down to a simpler question, which is what are your repayment expectations as you look out the next 1 or 2 quarters?

Sure.

So the second one, look, it's been choppy, right, repayment activity. We've seen -- we've had up and down months. We didn't have a lot in the quarter this year. We do -- we're kind of looking back to historical norms of around 30%. But to be honest, some of that is -- it's always guesswork a little bit, as we say. But because of that choppiness, it could be slightly higher, it could be slightly lower. I don't expect that in 2025, we're going to have this run to the exit for many of these deals. And that's true whether things improve dramatically from a rate and value standpoint or go the other way.

I think in both cases, you still are going to have owners that are going to hold on to assets a bit longer.

On the CLO front, so look, we are -- as we said, we are actively in discussions with capital markets partners for public transactions, but also looking at other ways to recap that part of our portfolio. Considerations that we're looking at, one is the weighted average life of the portfolio, how that impacts pricing on a new deal, whether we contribute more assets into a bigger deal and take some out of that transaction.

So those are the things that we're evaluating with various partners to just see what we think the overall impact is. I can tell you that I think there is appetite for a transaction to come to market. And I think in general, in our history, going back to 2016.

All of our deals have been well received. I would expect this to be no different. But we are focused on what is the most efficient transaction. We don't want to come to market with a deal that is going to be penalized because of certain factors or characteristics, whether that's the life of the assets or otherwise.

And so we're working with the partners to say, hey, does this make sense? Is it a first half event? It definitely could be. Is that guaranteed? No. But we're certainly currently actively evaluating it.

And then I wanted to touch on the 4-rated loans. It's about 1/3 of the portfolio and so 2025 loans, I'm guessing. But can you maybe talk a little bit about what part of that bucket are likely to pay off as a 4-rated loan or kind of in their life there versus which loans kind of are going to go one way or the other. And there's some event or catalyst that pushes them back to a 3 or to a 5, if that makes sense. I'm kind of curious to get a little color on how you think about the 4-rated loans and what the risk is of how many could potentially become 5s.

Sure. Well, and Jim, Braggs or Zach, you can talk a little bit about the process. But as we go through our risk rating every quarter, we model every loan out. And we have tried over the years to be very consistent with that model. Meaning we're only adjusting it to the extent that we're seeing really egregious errors that were unforeseen or things that we just think are off. But we've tried to maintain very consistent modeling, so that as we're reporting, we have very consistent reporting going back years.

And so we take those outputs. And then we evaluate each loan individually, right? And we have a discussion about whether there should be some adjustment made by the management to the modeled outcomes. And today, we have a specific reserve on one asset where we've said -- it's small. Jim, I don't know if you have that off hand. But we go through and look at the value, the recovery expectation that we see based on the value of the asset. And that's how we determine if we believe there should be a specific reserve.

So the 4-rated risk assets are mostly assets that have been certainly impacted by the increase in rates, decline in value and slow business plans.

And so the risk is elevated from where it was at origination. But based on our view of the current market, the current value of the asset and it's in market that we expect the full recovery. The fact that it's rated a 4 means that there's more risk to that than when it was originated at a 2 or whatever it was at origination. But based on what we've seen and based on the resolutions we've been able to achieve for the rest of the portfolio. We still remain confident and cautiously optimistic on our ability to get repaid on all of those assets. But we stand behind the risk rating and saying, hey, it would be improper and inaccurate to say that they have less risk today than they did at origination. Jim, I don't know if you want to add anything to the process on the risk rating side, but?

No, I think you covered it from a process perspective. And certainly, what we're doing on the 5s from a specific reserve perspective. To your question, Stephen, can some of those turn into 5s in the future? There's the potential. The 5s that we have today were 4s and 3s at some point. But yes, but we feel good about the process that we bring each quarter, including the comments that Jim made around being money good or expecting full repayment on whatever is today.

Your next question comes from the line of Steve Delaney from Citizens JMP Capital.

Jim Flynn, I'll address this first one to you. I'm just curious. I'd like to talk a little bit. We understand the runoff in 2021.

You can reinvest in 2023.

You made a comment in your entry remarks about ORIX being active in the bridge market. Based on what ORIX is doing, how would you compare the opportunity set just in terms of risk return in multifamily bridge lending that ORIX is seeing today versus what we saw in 2021, 2022? Maybe just start with sort of the market out there for multifamily bridge loans. And then I want to talk a little bit about how that can impact LFT as we move forward.

Sure. Well, look, I think clearly, the risk return -- well, the risk side, I mean, the deals today, in my opinion, as a whole are better, right? You've got a tightening lending standard that has existed in the overall market.

You have more muted kind of growth assumptions.

You're not in the midst of this extraordinary growth in rents and obviously, super low cap rate environment. And then you also have which are very attractive from my perspective is we've talked about and everyone has seen this. Typically written as a concern about the deliveries in largely the markets that have performed and grown the most over the past 5 years, the Sunbelt markets for the most part, a couple of the mountain cities. Those deliveries are -- of new assets are looking, in many cases, for lease-up bridge loans at relatively low LTVs, right, taking out construction financing, just giving them more time to lease up.

Our view of the overall market over the next 2 to 5-year period is that all of those markets are going to perform well.

So taking risk on a brand-new asset in a great long-term market at a relatively low leverage point is an attractive asset, right? So both traditional bridge on the value-add and the lease-up, both have, in my opinion, a better overall credit metric, in large part based on the leverage, in smaller part based on the growth.

Now the return profile, spreads have, they've kind of, I think, kind of bottomed out here. But we're in the 2s and 3s and maybe in the 4s for some assets for the most part -- earnings.

So that's probably in line, maybe a touch lower than it was at that period. But again, the risk is better. The key -- one of the drivers for this market, which we've seen improvement in and hopefully continue to see, improvement has been on the financing side.

So spreads coming in on the financing side is a real driver of the overall market, right? It provides for a more attractive return to investors for vehicles like LFT, but just across the market using that financing.

So that has improved, but it's not better than it was then, right? It's better than it's been. But it's not back to the levels we'd like to see, but it's getting there.

So I think that's the one thing that's going to drive, could drive the return side of things, but opportunities on the loan side, I think are attractive. And because of that credit, I think that's part of the reason you've seen some of the financing costs come in because those providing that, whether it's warehouse or those buying bonds, also see the same thing we're seeing, which is a lower risk profile of the pool of new assets.

That's really great color leading up to my follow-up.

For limited $1.2 billion portfolio, it seems that that is -- obviously, it's not going to move higher and probably could contract a bit until the point that you decide to pull the trigger on an early 2025 CLO and can kind of re-lever a bit.

As you guys, kind of look at your balance sheet and you look forward to a possible maybe not possible, likely financing over the next 6 months, where should we think with your capital base today and a new financing, where could your portfolio go from that $1.2 billion figure? Is there upside to the portfolio with your existing capital base just based on your improved financing?

I mean the short answer is yes.

I think that where current financing in the market is available. We could probably achieve some slightly higher leverage than we have today at that fixed cost turned out characteristic that we've always harped on in our calls.

So we certainly have assets at the manager and the sponsor that can be acquired to add to the portfolio. The only caveat there is the timing.

So right, the sooner that we make that or decide to perhaps enter a refinancing transaction. The closer we are to this period of disruption we've been going through over the last 18 to 24 months.

And so we've kept pretty -- relative to our size, we've kept pretty significant cash available.

So we'll have to just balance the leverage with making sure we maintain liquidity. But I do expect the portfolio to trend back toward $1.5 billion as opposed to going the other way. I'm not sure we get all the way there in one transaction. But I do expect there to be potential to add to the portfolio.

Your next question comes from the line of Crispin Love from Piper Sandler.

This is Brad Capuzzi on for Crispin.

Just wanted to ask on -- just from a broader perspective, can you just discuss your credit outlook? And do you believe we've reached peak stress in the multifamily credit in this cycle? And what's your intermediate-term outlook here given the current environment?

We reached peak stress.

If you tell me where the tenure is going to be in the next 6 months, I could probably offer a more accurate description. But I think the short answer is that we think that we have. And there may be some blips here and there over the coming months, et cetera. But overall, the stress that exists in the market, I think, for multifamily is already outstanding. Meaning we know that loans originated toward the end of this past cycle are where we've seen the greatest level of stress. We've seen some unique disruption in the fixed rate market with CMBS and agency debt and some of those same vintages of assets.

So things that have been financed over the last, say, 12 months, maybe even a little bit longer are not experiencing as a whole, the stress that is from the prior portfolio. And most of those assets were short-term finance assets.

And so I think from a standpoint of what are the issues outstanding. Lenders know what they are, including us, right? We have our risk ratings. We believe we're going to be able to work them out as you've seen based on our discussions around reserves. But I do think that we still have probably a 24-month period to kind of clear through all of those assets as an industry, as a market and how the economy performs will directly impact that.

So even with rates staying high, if we have a very strong economy, strong stock market, strong job market with moderate inflation like where we are now. Well, that's going to trend toward continued supply-demand pressure increasing in rents and despite higher rates, probably increasing NOI at most assets or many assets.

So I think the answer is we think we've probably hit the peak, but there's some time to work through those known problems in the industry. There's still a fairly bullish outlook on the overall next 3 to 5 for multifamily. We feel very good about the overall market fundamentals.

I appreciate that commentary. And then just the last question for me.

During the quarter, you added new investments after not adding the past 2 quarters, but still appears at the lower end of what we've seen in past years. What's kind of keeping you from being more active or adding more investments? Is it a concerted effort as you focus on asset management on the loans or lack of opportunities out there? And would you expect more opportunities in the coming months?

Sure.

So look, our reinvestment activity is entirely correlated to payoffs. We're fully deployed. And the declining portfolio balance is a result of the CLO 1 being through its reinvestment period and so that's deleveraging.

So the lack of reinvestment in the current quarter is related solely to the fewer payoffs or in the CLO with reinvestment or securitization. And if there are payoffs in the CLO 1, that just goes to delever.

So there's no additional capital to actually invest. And going back several quarters, we've discussed keeping relatively high liquidity outstanding. We've used that liquidity to buy a challenged asset like Augusta out of the CLO and then have that pay off.

So now we're going to have that cash.

So I think as Steve was just asking, as we look to potentially refinance our existing financings and securitizations. We could do so in a way that provides some more capacity than we've had. And then we would be able to fill that with existing loans that we currently hold on the managers' balance sheet.

So the reinvestment will be directly driven by what is the capacity within the vehicle. The opportunities are there.

[Operator Instructions] We do not have further questions at this time. Presenters, please continue.

Okay. Well, look, we appreciate everyone's interest here and look forward to speaking during the quarter and on our next call and we'll see you then. Thank you for joining.

This concludes today's conference call. Thank you for your participation.

You may now disconnect.